Piercing the corporate veil in divorce cases

After a legal struggle lasting more than five years Mrs Prest has finally succeeded in her claim for financial provision on divorce.

The Supreme Court’s decision today found an alternative solution enabling assets owned by the husband’s company to be transferred to the wife.

It was held that there is nothing within matrimonial legislation which authorised the transfer by one party to a marriage to the other any property not owned by him or her (i.e. because it was owned by a company). There remains a very limited principle in English law allowing the corporate veil to be pierced and that limited principle was not found in this case.

Instead, the Supreme Court found that the properties owned by the company were held on trust for the husband and that his beneficial interest was capable of being transferred to the wife.

In making these findings, the Supreme Court has perhaps prevented determined business-savvy husbands from sheltering their wealth in legitimate corporate structures to avoid the Divorce Courts.

The paternalistic approach of the Courts has once again offered protection for wives.